What drives decisions in teams? - The connection between Leadership, Culture and Decision making

When things started going wrong it all seemed to happen fast. It was lost in the immediacy of the situation, and the events that now seemed to be cascading out of control, that in reality it had been building up for a long time. The impending train wreck was running on tracks laid on a steady stream of poorly understood decisions, or at least a failure to see the possible ramifications as they built on one another. 

Much like in a petri dish that is used to ‘culture’ bacteria, the right conditions must exist for things to go well or badly wrong

And now that moment in time had passed where there was still a chance to change the outcome. The sequence of events and decisions, both deliberate and unintentional, had created the path to a whole new future with all its expected and unexpected consequences.

This passage could be describing any one of the fateful moments that many of us have personally experienced or witnessed from afar, decisions that set in motion a sequence of events resulting in enormous changes. Sometimes for the better and sometimes for the worse.

Looking more broadly, beyond personal experiences, one only needs to scan the daily news or recent history to find countless examples of situations spiralling out of control, such as: the Deep Water Horizon disaster, Collateralized Debt Obligations and the GFC, countless financial institution failures, the VW emissions scandal, Australia’s Financial Services and Banking problems, Lance Armstrong, the Australian Cricket ball tampering saga and the list goes on.

There are also the profound successes and turnarounds such as Apple, Marvel, Netflix and Lego. In sport a fascinating study of successes can be found in Sam Walkers book the Captains Class.

So what drives the decision making that creates the good results or at other times leads to failure? Reflecting on these stories it is tempting to oversimplify, to think in terms of black and white, though it is rarely so clear cut. Often the difference between good and bad decisions is very small and is not apparent until after the fact.

To learn and improve not only is it necessary to find out what happened, but more importantly….why the decisions made sense at the time. If you have an understanding of how, and critically, why, these decisions were made then you have a much better chance of preventing them from being repeated.

Much like in a petri dish that is used to ‘culture’ bacteria, the right conditions must exist for things to go well or badly wrong. What are the conditions and how do they arise for events to spiral out of control, for poor decisions to compound and, for us to be blinded to a future that so often is glaringly obvious in hindsight? Or conversely what conditions support decisions that lead to sustainable success? And what role do leaders play in creating the conditions for both good and poor quality decisions, and what can we, as leaders do to create better results?

The effect of culture on decisions

Cultural unwritten rules cast a broad and powerful shadow, they are often at the very heart of a culture and provide the most profound insights to the culture.

What guides our decision making, and what is the connection to the place and time that we are in when we make the decision? Decisions never occur in a vacuum. There is always a context and an environment that have a significant bearing on if and how we see situations, how we perceive the risks and the choices that we ultimately make.

While personal characteristics play a part in how we assess information and make decisions, our environment and in particular the culture that we are a part of, remember the petri dish, plays a significant part both in how we see the situation and how we judge an appropriate course of action.

At all times our judgement is profoundly influenced by what is going on around us, what we see and hear both consciously and subconsciously, preceding and during our decisions. To see the pervasive power of the environment and external factors, particularly authority figures, in our decision making one only has to look at the Milgram Experiment and many similar subsequent studies.

‘you won’t lose your job for breaking the written rules but your days are numbered if you break an unwritten rule’

Culture, expressed in, and driven by, the underlying values and, importantly, the unwritten rules, has a powerful impact on what we see, how we see it, and the judgements that we make about what we see. This is easy to see on a national level by looking at attitudes and approaches in different cultures to things like smoking, guns, freedom of choice, work methods, disposal of waste and countless other aspects of life.

In organisations and teams the culture is expressed in many ways including respect, or lack of respect for process, power structures and hierarchy, ways of communicating and working together, escalation of risk based decision making and levels of risk appetite and risk tolerance and general attitudes to harm, damage, quality, waste, winning, losing and ultimately profit.

Our risk perception and our decision making is strongly influenced by what the team or organisation that we are a part of considers important, and the influential underlying unwritten rules. Unwritten rules in particular cast a broad and powerful shadow; they are often at the very heart of a culture and provide the most profound insights to the culture.

Unwritten rules often provide the most clear insight into why things are happening. The power of unwritten rules is beautifully captured in a comment from a senior member of one of the organisations that I have worked with who said ‘you won’t lose your job for breaking the written rules but your days are numbered if you break an unwritten rule’.

Why is it so hard to see?

Culture, which is measurable, is a profound leading indicator of future performance

It is a significant problem that the culture which influences decision making is difficult to observe, particularly when you are inside it. Different perspectives are always most apparent from the outside looking in. It is much more difficult to see our own biases and how we look at things than it is to see it in others.

As a result, when operating within a culture, there is a strong tendency to blindness. We don’t see the key aspects of the culture and we don’t realise how it is influencing us.  To maintain balance and to safeguard the best interests of the team or organisation, leaders must ensure that a mirror is regularly held up to teams and the organisation as a whole.

How the culture treats risk, expressed in factors such as risk perception, risk appetite, risk tolerance, and escalation of risk based decision making must be regularly monitored and reviewed. The process of cultural overview and reflection should occur in all parts of an organisation. However, ultimate responsibility for understanding and setting the approach to risk rests with the highest levels of organisations and in particular the board or governance function, because leaders have the most profound impact and ultimate responsibility for culture.

The impact of leaders

Leaders create culture….

 for leaders who believe that culture is not a reflection of their leadership, it either means that the role of leadership is not understood or that someone else is leading.

So where does culture come from, how is it created and changed? Leaders create culture! One only has to look at history or the world around us to see the deep impact that leaders have on culture. Whether it is on a national basis, in organisations, or in teams, the impact of leaders on culture is profound.

No doubt, as you think of examples you will see that leaders don’t always create a positive culture. However, as a leader you always have a choice about the type of culture that you create. It must be done with intent; by understanding how culture works, the consequences of actions and the power of symbolism.

It is particularly important for leaders to remember that culture is heavily influenced both by what we do, and what we choose to ignore. Leaders who believe that culture is not a reflection of their leadership, do not understand the role or it is someone else who is leading.

Significantly what culture is and how it works is widely misunderstood. Without a clear model for mapping and understanding culture, it becomes an almost mystical exercise to define and influence it. A simple way to test the level of understanding is to apply the maxim; if you can’t explain it, you don’t understand it. Try to provide a succinct definition of culture and try to explain how it works. Also ask those around you to do the same, and see how many of those definitions align and how practicable and usable they are. 

If, as a leader, you don’t have a clear understanding of what culture is, and a practical and simple model of how it works, then you are flying blind. Leading without a clear mental model of culture is the equivalent of trying to build a house without a plan or playing a game without knowing the rules.

So if questionable decisions are being made, or if you are getting the wrong results, one of the first questions for a leader is; what am I doing to create these results? Looking in the mirror is not always easy, it takes courage to see not just our strengths but also our weaknesses. Likewise, if things are going well it is important to see, acknowledge and build on the actions that are creating positive results.

Creating the right outcomes

Regardless of the level that you operate at in an organisation, be it as a Frontline Supervisor, Manager, Executive or Board member there are some important questions that you should consider;

• Is it clear who the ‘culture leaders’ are, and what influence they are having?
• Has the desired culture been defined and is it being created with intent? Or is it being left to chance?
• Do you have a clear model of culture and how it works?
• Is there a road map linking leadership behaviours to the desired outcomes?
• Do you know what the unwritten rules are? Are they having the right effect?
• Is the symbolism of actions fully understood, both the things that are done and what is ignored?
• Is there clarity on the escalation of risk based decision making?
• How is risk appetite and risk tolerance communicated?
• Is there a regular and transparent process to review the culture?
• Is the culture owned by leaders?

Working with organisations ranging from small to multinational around the world, I have found that done the right way, building a culture that supports high quality risk-based decision making drives performance and ultimately delivers great results. One of my most satisfying examples of putting this into action is the Imagine think Act program that I helped to create and implement. It is hard work, but it is less work and much more satisfying than dealing with the consequences of not getting it right.

Whether you lead a small team, a department, a company or even a country there is a choice. And the choices that you make are reflected in the many different ways that the future plays out. Culture, which is measurable, is a profound leading indicator of future performance and leaders have an absolute role in defining that future through the culture that they build and the type of risk based decision making that it supports.

Note: For those wondering about the photo. It is from an interview with players of the Australian cricket team involved in the ball tampering saga. A direct insight into how culture can work for good and bad